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Two economic indicators offered mixed signals in reports released on Thursday, with the manufacturing sector posting a stronger than expected performance, but construction spending lagging behind forecasts.

"The rate of growth as indicated by the [Purchasing Managers Index] is the fastest since July 2004," Norbert Ore, chairman of the ISM business survey committee, said in a statement. "Both new orders and production rose above 60% this month, closing the first quarter with significant momentum going forward."

And positive momentum in this economic environment is sorely needed. The index outperformed economists' expectations, which pegged the growth at 56.3, according to economists surveyed by Bloomberg News. A figure above 50 on the index reflects an expansion, while a number below 50 indicates an economy in contraction.

Manufacturing sectors that helped fuel the March growth included textiles, appliances and components, computer and electronic products, and wood products.
Erosion in Construction Spending Worse Than Predicted

Construction spending, however, did not fare as well in February, according to a report by the U.S. Commerce Department. The industry posted a 1.3% decline to a seasonally adjusted rate of $846.2 billion, compared with $857.8 billion in January. Economists had anticipated only a 1.1% decline, according to Bloomberg News.

Dragging the figures lower than expected was a further erosion in residential and nonresidential construction spending, which fell below the revised January estimates. The combined results left private construction down 1.2% to $553.5 billion, compared with the revised January results.

Public construction also declined in February by 1.7% to $292.7 billion, over the previous month. Highway construction, in particular, was hit with a 2.1% drop to $79.8 billion in February, compared with the previous month.